Extreme urgency? The judicial spotlight is now trained on Regulation 32(2)(c)
The Good Law Project has brought judicial review proceedings against the Department for Health and Social Care in respect of its direct award of a £108m contract for PPE in April is putting the use of Regulation 32 of the Public Contracts Regulations 2015 (Regulations) under the spotlight.
Please note: the information contained in this legal update is correct as of the original date of publication.
As noted in our earlier legal opinion the news that the Good Law Project has brought judicial review proceedings against the Department for Health and Social Care in respect of its direct award of a £108m contract for PPE in April is putting the use of Regulation 32 of the Public Contracts Regulations 2015 (Regulations) under the spotlight.
This raises a number of issues for contracting authorities. Firstly, the impact of any ruling in this matter and the precedent it sets could have a significant impact on contracting authorities’ ability to rely on this provision to directly award contacts going forward. Of course, it may also be that it provides greater freedom to do so.
Secondly the fact that questions are being asked about the appropriateness of reliance on Regulation 32(2)(c) now means contracting authorities up and down the country may face scrutiny over any decisions they have taken or subsequently take to directly award contracts. This type of questioning and scrutiny may become more prevalent in those sectors where the economic impact of the Pandemic are being felt the most.
The scope of Regulation 32(2)(c)
During the UK wide response to the Covid-19 pandemic many UK public sector bodies have found themselves needing to place contracts with suppliers and service providers on an urgent basis and Regulation 32 provided the legal basis on which they might be able to do so without contravening the Regulations. In fact as the Pandemic took hold procurement professionals up and down the country were thankful that the Regulations were tailor made to deal with this situation. The Cabinet Office also issued guidance in the form of PPN 01/20 which provided a steer as to when it might be appropriate to rely on the extreme urgency provisions.
By way of reminder Regulation 32(2)(c) provides that a contract may be directly awarded:
“insofar as is strictly necessary where, for reasons of extreme urgency brought about by events unforeseeable by the contracting authority, the time limits for the open or restricted procedures or competitive procedure with negotiation cannot be complied with.”
The caveat to that is “the circumstances invoked to justify extreme urgency must not in any event be attributable to the contracting authority.”
There a number of component parts to Regulation 32(2)(c) all of which must be satisfied to ensure that a direct award on this basis is legally sound. On the face of it a Pandemic would seem to easily satisfy the requirement for the events to be unforeseeable by the contracting authority. Furthermore, most people can accept that such a situation is likely to require contracting authorities to act quickly in awarding contracts for reasons of extreme urgency such as being able to mobilise additional health and social care services to support a public health response. Nevertheless Regulation 32(2)(c) does not afford contracting authorities carte blanche to directly award contracts as and when they consider it necessary even in situations extreme as the one the country currently finds itself in. For example, whilst a situation such as a pandemic could reasonably be considered to be an unforeseeable event before it takes hold, it is arguable that is ceases to be unforeseeable some months later even if it effects are still being felt. At that point contracting authorities might have had time to map out their response and determine the support and/or services they would need to contract for and plan accordingly including conducting procurements where necessary.
In order to rely on Regulation 32(2)(c) it is also necessary to show that the time limits for an open or restricted or a competitive procedure with negotiation cannot be complied with. However, the time limits imposed in respect of each of these procedures are not set in stone and the Regulations include some flex to allow them to be reduced in certain circumstances. It is, therefore, not without possibility that two months into a pandemic response a contracting authority would have had time to run an accelerated procurement procedure in compliance with the Regulations.
Whether or not Regulation 32(2)(c) can be relied on in a given situation will always turn on the specific facts, the nature of the contract and when the need for it became apparent. However, a failure to make out any single aspect of the Regulation 32(2)(c) test would likely be sufficient to undermine reliance on it and given the number of component parts to it, that might not be too difficult to achieve.
Another issue we expect to see come to the fore in this litigation is whether the length of the contract awarded was acceptable. It is generally accepted that when relying on Regulation 32(2)(c) contracts should be awarded for no longer than is necessary to allow the contracting authority to address the immediate issues and run a competitive process. Again what is reasonable and acceptable will need to be looked at on a case by case basis and even if 12 months is considered reasonable and compatible with Regulation 32(2)(c) in the context of the DHSC’s directly awarded contract that is not to say it would be in all circumstances.
Market motivation for challenge
Many contractors are suffering economically as a result of the Pandemic meaning that they are fighting to protect the contracts they hold but also questioning the award of those they have lost out on. Losing out on potential business to a direct award to a competitor could be sufficient motivation to look a bit more closely at exactly what the contracting authority has done and ask some tricky questions. Therefore, contracting authorities who are still seeking to award contracts in relation on Regulation 32(2)(c) should give careful consideration to the full facts of the situation before coming to a decision as to how to proceed.
For now, whilst we wait to see how this challenge plays out, the key points to take away when seeking to rely on Regulation 32(2)(c) are:
- Consider the use of Regulation 32(2)(c) specifically as against the facts of the situation
- Consider each aspect of Regulation 32(2)(c) and ensure it applies in the circumstances
- Maintain a complete audit trail of the decision taken and the reasons for it
- Be clear in any subsequent contract award notice as to why Regulation 32(2)(c) is applicable in that given scenario.
Further support
If you would like to discuss any aspect of your organisation’s procurement activity during its Pandemic response or are interested in our procurement audit and review offering to support please do get in touch.
Related expertise
You may be interested in...
Opinion - Maternity services
University Hospital Leicester hold their inaugural Maternity Safety Conference
In Person Event
Navigating your way through high profile sensitive reviews and investigations
Opinion
Junior doctors vote unanimously in favour of strike action
Opinion
Can toilet facilities amount to sex discrimination?
Published Article
Digital Twin Technologies: key legal contractual considerations
Opinion
Consultation launched on minimum ambulance service levels during strike action
Opinion - Maternity services
Changes to redundancy protections for employees post-maternity leave
Legal Update - Shared Insights
Shared Insights: Coroners’ Question Time
Press Release - Careers
Browne Jacobson health lawyer wins major accolade at Made in Manchester Awards
Opinion
BMA issues medical locum rate card for junior doctors
Legal Update
Employee who refused to wear a face mask fairly dismissed
Opinion
New toolkit to support safer recruitment in the care sector
Legal Update
Green Leases for the NHS
Guide
Government response to the consultation on the Higher-Risk Buildings Regulations
Published Article
The first 100 days for Integrated Care Boards
Opinion
Menopause and the workplace
On-Demand
Future of Care - Retirement Living webinar
In Person Event
Independent Healthcare In-House Lawyers Forum
Opinion
Government introduces new “anti-striking laws” to be discussed in Parliament
Press Release - Maternity services
Father Christmas comes to University Hospital Coventry and Warwickshire care of Browne Jacobson’s Birmingham Office Community Action Group
Opinion - Maternity services
The Patient Safety Incident Response Framework (PSIRF) and its impact on maternity services
Legal Update - Shared Insights
Shared Insights: Looking ahead to 2023 – what Health and Care employers need to know
Opinion
Coroner’s refusal to issue a Prevention of Future Deaths Report following death in prison custody inquest was lawful
Article
Mental health, eating disorders and placement of young people
Legal Update
LPS consultation and ‘go live’ planning
Opinion
Consultation launched on plans to amend NHS pension rules to bolster NHS workforce
Legal Update
Getting ready to face Industrial Action
Legal Update - Shared Insights
Shared Insights: Prolonged disorders of consciousness
Published Article
How AI and technology can transform the healthcare sector
On-Demand
The UK's green agenda - the outcomes of COP27 and actions since COP26
On-Demand
Insights from the Chief Coroner by His Honour Judge Thomas Teague, KC
Opinion
BMA advises consultants not to accept less than the BMA minimum rate card for extra-contractual work
The BMA is advising all NHS / HSCNI consultants to ensure extra-contractual work is paid at the BMA minimum recommended rate and to decline offers of extra-contractual work that doesn't value them appropriately.
On-Demand
Leadership and lessons learnt during the Pandemic by Professor Jonathan Van-Tam
Published Article
Local authority duties: Up in the air
In ‘failure to remove’ claims, the claimant alleges abuse in the family home and asserts that the local authority should have known about the abuse and/or that they should have removed the claimant from the family home and into care earlier.
Legal Update - Shared Insights
Shared Insights: The Patient Safety Incident Response Framework
Guide - Maternity services
Mediation guide for Clinicians: What do you need to know and how do you need to prepare
Opinion
NHS England – Updated Transaction Guidance
NHS England has published (October 2022) new guidance - Assuring and supporting complex change: Statutory transactions, including mergers and acquisitions.
Opinion
NHS England – Assuring and supporting complex change
NHS England has issued an updated (publication 11 October 2022) suite of Complex Change guidance about how it will assure and support proposals for complex change that are reportable to it. New and (where it is still in force) existing Complex Change guidance are as follows.
Legal Update
The Retained EU Law
Created at the end of the Brexit transition period, Retained EU Law is a category of domestic law that consists of EU-derived legislation retained in our domestic legal framework by the European Union (Withdrawal) Act 2018. This was never intended to be a permanent arrangement as parliament promised to deal with retained EU law through the Retained EU Law (Revocation and Reform) Bill (the “Bill”).
Legal Update
Economic crime and cybercrime
It is clear that the digital landscape, often termed cyberspace, is a man-made environment, in which human behaviour dominates and where technology both influences and aids our role in it — through the internet, telecoms and networked computer systems, which are often interdependent. The extent to which any organisation is potentially vulnerable to cyber-attack depends on how well these elements are aligned.